The Baltic Exchange’s dry bulk sea freight index continues to collapse, losing another 19.8% this week, after losing nearly 23% last week to its lowest since early February 2021. The index fell for an eleventh straight session on Friday, weighed down by soft demand across vessel segments. The Capesize index fell to its lowest since June 2020. The index is down 40.4% this week, after falling 17.38% last week.
Baltic Exchange Dry Index (BDI) Segments (Jan 21, 2022)
- The Baltic Exchange Dry Index fell 59 points, or 4%, to 1,415, its lowest since mid-February 2021, losing nearly 19.8% this week. Losses extended for an eleventh straight session, amid weaker seasonal demand across all vessel segments.
- The capesize index dropped 140 points, or 13.6%, to 891, its lowest since June 2020. The index is down 40.4% this week, its biggest drop since the week ended Dec. 17. Average daily earnings for capesizes, which transport 150,000-tonne cargoes such as iron ore and coal, dropped by $1,157 to $7,390.
- The panamax index which tracks cargoes of about 60,000 to 70,000 tonnes of coal and grains, fell 14 points, or 0.7%, to 2,010, its lowest since mid-April 2021. The index was down 15.3% for the week. Average daily earnings for panamaxes, fell by $133 to $18,087.
- Among smaller vessels, supramax index (.BSIS) fell 24 points to its lowest level since end-February 2021 at 1,749.
Factors influencing Freight right now
- China’s December iron ore imports slumped 18% month-on-month to 86.07 million tonnes, sending its annual purchase to 1.12 billion tonnes in 2021, down from the record high a year earlier, customs data showed.
- However Chinese iron ore futures rose around 3%, posting a third straight weekly gain amid hopes for strong demand, fueled by Beijing’s fresh stimulus measures, while steel prices were range-bound as production curbs at mills weighed.
- Heavy rains have pounded the mining region of Minas Gerais state in southeast Brazil relentlessly for the past three weeks,
- French steel pipe maker Vallourec has suspended mining operations in Pau Branco.
- Omicron uncertainty
Randy Giveans, vice-president, equity research, at Jefferies. commented on the current price situation;
“This is normal seasonal softness going into mid to late January throughout February, the biggest reason is Chinese New Year. This year we need to add on Beijing Winter Olympics and weather disruptions in Brazil. The near-term outlook is certainly going to be weak and then we think there will be some pent-up demand that boosts rates in late February into March and April.”
The Baltic Dry Index (BDI) is a composite of the dry bulk timecharter averages and provides a continuous time series since 1985. The BDI is a composite of and factors in rates for Capesize, Panamax and Supramax Timecharter Averages. It is reported around the world as a proxy for dry bulk shipping stocks as well as a general shipping market bellwether.
- Baltic Capesize Index (40%)
- Baltic Panamax Index (30%)
- Baltic Supramax Index (30%)
There a number of negative catalysts stemming from the climate and supply crisis stifling demand. While we are seeing easing congestion at Chinese ports and thin coal cargo flows out of the Pacific are weighing on capesizes. Steel futures prices in China jumped, with hot-rolled coils and construction rebar climbing more than 4% in intraday trade to narrow the gap with spot prices, as traders cheered a marginal improvement in consumption of industrial metals.
With China striving to ease it’s energy crisis by limiting steel production to limit industrial power usage portside inventory of iron ore has swollen to the highest level in 31 months. China is the world’s top steel producer and their restrictions have crushed demand. for iron ore.
What are the Baltic indices?
From The Baltic Exchange
The Baltic indices are based on assessments of the cost of transporting various bulk cargoes, both wet (eg crude oil and oil products),dry (eg coal and iron ore), gas (LNG and LPG) made by leading shipbroking houses located around the world on a per tonne and daily hire basis. The information is collated and published by the Baltic Exchange. We also provide daily container market assessments in collaboration with Freightos and a weekly air freight index as well as assessments on vessel operating costs, Sale & Purchase and vessel recycling prices.
The principal dry cargo indices are: the Baltic Exchange Capesize Index (BCI); Baltic Exchange Panamax Index (BPI); the Baltic Exchange Supramax Index (BSI); and the Baltic Exchange Handysize index (BHSI). The Baltic Exchange Dry Index (BDI) is calculated by taking the timecharter components of the Baltic’s capesize, panamax and supramax indices.
The Baltic Exchange International Tanker Routes (BITR) reports on international oil routes and makes up the Baltic Exchange Dirty Tanker Index (BDTI) and the Baltic Exchange Clean Tanker Index (BCTI).
We cover the gas markets through our LNG (BLNG) and LPG (BLPG) assessments.
Shipping investors are able to assess the health of vessel earnings through our quarterly operating expenses assessments, as well as our weekly Sale & Purchase and Recycling assessments.
Forward curves for all listed freight contracts are also published on a daily basis.
Source: The Baltic Exchange
From The TradersCommunity US Research Desk